Fourikis v Fourikis

[2014] VCC 49

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST

GENERAL CASES DIVISION

Case No. CI-13-06129

ALEXANDER FOURIKIS (BY HIS ADMINISTRATOR, STATE TRUSTEES LIMITED)	Plaintiff
v.
JAMES FOURIKIS	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	4 February 2014
DATE OF JUDGMENT:	4 February 2014 (revised 5 February 2014)
CASE MAY BE CITED AS:	Fourikis v. Fourikis
MEDIUM NEUTRAL CITATION:	[2014] VCC 49

REASONS FOR JUDGMENT

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Catchwords:              Practice and procedure – Freezing order – Claim against the administrator of an estate of a person with permanent brain injury – Funds used for speculative investment in shares and foreign exchange transactions – Defendant’s report upon his administration of the estate for 2011, when the dealings took place, was examined and approved by State Trustees Limited – Freezing order refused – Early mediation ordered to see if the proceeding can be resolved without further dissipation of the estate.    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A. Donald	State Trustees Limited
For the Defendant	Mr J. Fourikis in person

HIS HONOUR:

1Alexander Fourikis suffered permanent brain injury in a motor vehicle accident in November 2004. His affairs have been managed pursuant to the provisions of the Guardianship and Administration Act1986 (Vic), firstly, by his father George Fourikis and, after his death, by his brother, James Fourikis. In March 2012, James Fourikis was removed as trustee and since that time the State Trustees Ltd (“State Trustees”) have performed that role.

2State Trustees have brought a proceeding in the name of Alexander Fourikis by Writ filed 27 November 2013 against James Fourikis. The Writ claims that James Fourikis did not exercise his responsibilities as the administrator of his brother’s affairs in an appropriate manner and claims that damages of approximately $186,000 should be paid by James Fourikis to his brother.

3The damages essentially represent the difference between the value of Alexander Fourikis’ estate after the defendant was appointed in March 2010 of $209,646 and the value of the estate when State Trustees took over, of approximately $60,000. In addition, further sums totalling $38,000 are claimed for interest that would otherwise have accrued to the estate and other monies which are said to be unaccounted for.

4The present application before the Court is an application for a freezing order. The application was brought by a summons filed 20 December 2013. The application is supported by an affidavit sworn by Raelene Blick, a senior personal financial consultant, employed by State Trustees. The defendant has sworn a short affidavit setting out a statement of his assets and financial position.

5During the course of argument, I have been handed certain further documents by the parties, including copies of the annual accounts provided by James Fourikis, as administrator of his brother’s estate, to VCAT in respect of his administration to 30 June 2010 and to 30 June 2011. In addition, I have been provided with a copy letter from VCAT to James Fourikis dated 28 December 2011 noting that “State Trustees Ltd has examined the 2011 ABA [Account by Administrator] you sent us. They report the ABA is in order…VCAT is satisfied you are managing the represented person’s financial affairs properly. We do not require you to take any further action about the 2011 ABA”. A further document provided by James Fourikis was an email that he sent to Ms Blick on 4 May 2013 in response to a letter sent to him by Ms Blick.

6After considering the material and the submissions made by the parties I have determined that it would not be appropriate to grant a freezing order in the present case. I have reached this decision without forming any concluded view about the matters in dispute in the proceeding itself, save it appears that during the year 2010 to 2011:

a.James Fourikis transferred a substantial proportion of the funds previously held in bank accounts in his brother’s name to accounts in his own name;

b.James Fourikis used those funds for trading in foreign currencies and in the purchase of shares, including mining stocks.

7James Fourikis informed the Court that he had disclosed in attachments to the 2011 ABA, documents evidencing the share and foreign currency transactions (although those documents did not form part of the material handed up to me) and that when he was removed as his brother’s administrator, the financial position in relation to those share and foreign currency transactions had not necessarily resulted in any capital loss to his brother.

8These matters would seem to constitute the most critical issues which will determine the proceeding. There are subsidiary issues relating to the alleged misuse of a credit card which, it is said, resulted in expenditure by James Fourikis of approximately $7,000 for his personal use and a series of other “investments”, in a lock-up garage in St Kilda, a block of land in Lismore and a kit building. James Fourikis has not presently explained how these investments were of benefit to his brother.

9James Fourikis’ recent affidavit as to his assets and financial position discloses that he has modest assets. A title search of a property in Queensland obtained by Ms Blick, discloses that “James Fourikis” owns a property on the Gold Coast which is subject to a number of mining leases. Mr Fourikis denied any knowledge of such a property and it is unclear at present whether the defendant in the current proceeding is the James Fourikis noted on the title to the property, although the defendant does live on the Gold Coast and has a time share in relation to a property on the Gold Coast.

10The principal matters which have influenced me in reaching my conclusion that a freezing order should not be made are as follows:

a.the fact that the ABA’s for 2010-2011 were not included in the material put before the Court by the plaintiff. Particularly the 2011 report, sets out in considerable detail James Fourikis’ administration of his brother’s affairs during the previous year and clarifies the reasons why the nature of the investments held on his brother’s behalf changed during the reporting period;

b.although it had been suggested that James Fourikis had not cooperated in responding to enquiries made of him as to his administration of his brother’s estate, he appears to have adequately responded to the only written enquiry produced to me;

c.the State Trustees took over the administration of the estate in March 2012. It has taken a considerable time to bring the present application. That delay is generally unexplained. An examination of the 2011 ABA and a comparison with the 2010 ABA revealed considerably more detail than the affidavit material filed in support of the application;

d.whilst the investments undertaken by James Fourikis might appear to be unwise and inappropriate, they were disclosed in the 2011 ABA which, according to the VCAT letter, were examined by State Trustees who reported to VCAT that the account of the administration was “in order”. This letter was also not be referred to in material filed in support of the application;

e.the nature of the allegations made in the claim are very serious and in the ordinary course would be likely to involve extensive interlocutory steps and the possibility of a trial extending over many days. The claim is brought by State Trustees on behalf of Alexander Fourikis. The funds available for both Mr Fourikis’ care, and to fund the present action, are modest. The assets available to James Fourikis, as deposed to by him, are limited and, if the recent affidavit is correct, would provide little compensation to the plaintiff if he were successful in the litigation;

f.it is likely that any restriction on James Fourikis dealing with the limited assets he has would be more of an inconvenience than in achieving the objective of maintaining assets to meet a likely award of damages in the litigation.

11I suggested to plaintiff’s counsel that it would be appropriate, before further extensive costs are incurred, for there to be either a mediation or a Judicial Resolution Conference. I consider, in the circumstances, a private mediation would be a better option as I anticipate that either step would involve investigation of two issues:

a.the appropriateness of the “investments”, and particularly the foreign exchange and share trading during the year ended 30 June 2011 by James Fourikis using his brother’s money;

b.the means available to James Fourikis to meet any award of damages if the plaintiff were successful in the proceeding.

12James Fourikis represents himself in the proceeding. I have noted the following matters which may be indicative of a person who is generally cooperative:

a.the detail provided in the ABA reports in 2010 and 2011;

b.his response to the written enquiry made by State Trustees in May 2013;

c.the filing of an affidavit relating to his assets and financial position in advance of the making of a freezing order.

13I consider, in circumstances where the interests of Alexander Fourikis are of fundamental importance, particularly the maintenance of the funds available for his future support, and the nature of the serious allegations contained in the claim against James Fourikis, that every effort should be made by State Trustees to ensure that the best result for Alexander Fourikis is obtained as quickly and as cost effectively as possible. I have suggested that if a mediation were conducted in the near future it would be appropriate, in order to facilitate that mediation, that the costs of the mediation be borne in the first instance by the plaintiff.

14To ensure that the mediator is fully informed, it is appropriate that the defendant be required to file a Defence to the Statement of Claim, that the parties are able to request that any document not presently in their possession which may be in the possession of the other party be provided by way of informal and preliminary discovery and that the mediator have available at the mediation documents that have been produced to me and any further material that bears directly on the two issues I have identified as of primary importance, being the investments made by James Fourikis on his brother’s behalf and the means available to James Fourikis to meet any award of damages.

15The State Trustees should also be in a position to inform the mediator of the following matters:

a.the present financial position of the estate of Alexander Fourikis;

b.the likely costs of the further administration of the estate, in particular as a consequence of the present proceeding;

c.the costs of the proceeding for the plaintiff on a solicitor-client basis to the date of the mediation, and as estimated, to completion of the trial and the recoverable costs, if the plaintiff were successful, calculated on a party-party basis.

16I propose the following orders:

1.By 4pm on 25 February 2014, the defendant must file his defence to the statement of claim. The defence must address each paragraph separately in the Statement of Claim and state specifically whether the allegations of fact are admitted or denied, or if for some reason they cannot be admitted or denied at this stage, stating the reason for that, and asserting any other facts which the defendant says are relevant to the allegations, for example, the course of the investments that he, as administrator of his brother’s estate, put in place which were effected by decisions made after he was removed as administrator.

2.Either party may, by letter or email, request the other party to provide copies of any documents not presently in the possession of that party which it is believed the other party may have a copy. Any response to the request should be made promptly. This process will be by way of informal and preliminary discovery without affecting the obligation upon the parties at a later stage to make discovery of documents in accordance with the usual orders.

3.As soon as practicable, the plaintiff shall submit to the defendant a list of three potential mediators with a short summary of their qualifications. The defendant must, within 7 days, nominate one of the three persons as the mediator or must advise the Associate to His Honour Judge Anderson in writing that none of the persons listed by the plaintiff are acceptable and give reasons for that statement. In that case, the defendant must nominate three further persons indicating their qualifications. A copy of any correspondence with the Court must be copied to the other party. If necessary, a further directions hearing will be listed by the Court. If possible and unless a party has specifically requested that the matter be decided after hearing oral submissions by the parties at a hearing in open Court, the Court will attempt to decide the matter “on the papers” without a further hearing.

4.In the first instance, the costs of the mediation, which should be booked in for one day and which costs shall include the cost of room hire, shall be borne by the plaintiff but will be costs in the cause. The mediation must conclude before 12 March 2014.

5.If the proceeding does not resolve at mediation, the parties must by 19 March 2014 inform the Court of that fact and that a trial date should be listed, and setting out the interlocutory directions required prior to trial.

6.The plaintiff’s summons filed 20 December 2013 is otherwise dismissed.

7.Service of documents on the defendant by email shall be good and proper service. The defendant was informed that assistance and information in relation to Court processes may be obtained from the Court’s Self-Represented Litigants Coordinator.

8.Reserve costs.

9.Reserve liberty to apply.

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Certificate

I certify that these 6 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 4 February 2014 and revised on 5 February 2014.

Dated: 5 February 2014

Catherine Kusiak

Associate to His Honour Judge Anderson